NEW YORK, United States — How did James Jebbia, the quiet mastermind behind Supreme, turn a single store on Lafayette Street into a global fashion cult? Scrappy start-up hustle, carefully cultivated street ‘cred’ and an innovative business model, rooted in cool but accessibly-priced product and tightly controlled releases, were all critical to success. So were the company’s financial backers.

On October 6th, the Supreme founder confirmed that private equity firm The Carlyle Group had acquired a significant stake in the business. “We’re a growing brand, and to sustain that growth we’ve chosen to work with Carlyle, who has the operational expertise needed to keep us on the steady path we’ve been on since 1994,” Jebbia told BoF. “Working with Carlyle allows us to concentrate on doing what we do best and remain in control of our brand, as we always have.”

The terms of the transaction were undisclosed. However, sources close to the company confirmed that Carlyle paid around $500 million for a roughly 50 percent stake in Supreme in a deal that valued the business at over $1 billion.

But Carlyle wasn’t the first external investor to pump money into Supreme. Indeed, while Jebbia was ultra-careful to maintain his label’s credibility with customers, he built what has become of one of the world’s coolest and most commercially successful fashion labels — often dubbed “the Chanel of streetwear” for the power of its brand — with the help of a secret partner.

In 2014, Goode Partners, a New York-based private equity firm, took a minority stake in Supreme via two investment vehicles — Goode Supreme Holdings Co-Invest LLC (reported to the SEC as Goode Co-Investment Vehicle 12) and Goode Supreme Holdings Co-Invest II LLC (reported to the SEC as Goode Co-Investment Vehicle 13) — according to corporate filings and sources close to the company. Supreme was not listed as a portfolio company on Goode Partners’ website and neither Jebbia nor Goode ever spoke publicly about the deal, but Keith Miller, a partner at Goode, sits on the board of Supreme, according to a bio published on the private equity firm’s site. Miller did not immediately respond to a request for comment.

In addition to offering operational support, Goode provided capital that helped Supreme to expand its retail network. In March 2016, the label opened its tenth store in the Marais district of Paris. A second New York boutique launched with a big party just last week in the Williamsburg neighbourhood of Brooklyn. (The company also has a store each in Los Angeles and London, six stores in Japan and its original outpost on Lafayette Street, all of which pre-date Goode’s investment). With the exception of Dover Street Market, Supreme does not wholesale, but the label's e-commerce business is thought to account for a significant chunk of overall sales revenue and backing from Goode may have also helped Supreme to finance digital growth.

Private equity firms typically aim to acquire, rapidly grow and then sell companies within three to five years and the deal with Goode may help to explain some of Supreme’s recent moves, like its blockbuster collaboration with luxury mega-brand Louis Vuitton, which attracted waves of consumer excitement as well as charges from longtime fans that the company had abandoned its counterculture roots and “sold out.” (In 2000, Supreme received a cease and desist letter from Louis Vuitton after it printed the luxury brand’s classic monogram on skateboard decks without authorization).

To be sure, the streetwear scene values authenticity and can be suspicious of success. This is likely the reason why Jebbia kept the backing from Goode a secret and consistently avoided questions on investors. “As a small brand, we do it all. We don’t need an investor,” Jebbia told BoF back in 2016. “We would never go anywhere or do anything where we feel it would compromise what we do.”

For its part, Goode seems to have been happy to remain quiet about its stake in Supreme, likely realising the benefits of helping to maintain the fiction that Supreme was a wholly independent label without financial backing as its investment grew and grew. Goode is thought to have sold its stake in Supreme to Carlyle, netting the firm a very healthy exit.

The question now is what Carlyle’s position in the business will mean for Supreme. Like Goode, the private equity giant will ultimately be looking for an exit. Future acquirers could include a strategic investor like the French luxury conglomerate LVMH, which owns Louis Vuitton. Supreme could also IPO, following a route taken by the likes of Michael Kors. But either path means driving growth, greater exposure and perhaps catapulting Supreme into the mainstream. The challenge will be having the discipline and patience to maintain the delicate balance of cultural credibility, high sales volume and the perception of exclusivity that has made Supreme a powerful brand for so many years.